Shawn Palmer says his medical marijuana dispensary business has been licensed annually in Billings since 2011.

When he went to renew near the end of 2017, he says the city denied him. Then the city sent him code violation notices that said the dispensary should cease doing business because he had no business license.

While the city granted him business licenses in previous years, Palmer invested in the Grand Avenue property, which is accessible only to registered medical marijuana patients.

He wondered why the city could change its tune now.

“I spent almost $100,000 on that building for one very simple reason,” he said. “I wanted to have a shop that was for the client and was private and secure. No children, no public exposure to my cannabis shop.”

Palmer's lawsuit seeks a court order allowing him to continue operating in Billings. Like the first dispensary that sued, Palmer renewed his business license with Billings for years despite a city ordinance that prohibited it.

The plaintiffs in Palmer's lawsuit include three patients who say they rely on medical marijuana and that their access would be severely limited if Montana Organic Medical Supply moved out of the city.

The patients have limited mobility and rely on getting rides to the dispensary. Laurie Parker, one of the patients, has had 10 surgeries resulting from cancer, according to the lawsuit. Marijuana allowed her to be well enough to get a job, the lawsuit says.

If Palmer's dispensary moved out of town, Parker would have a harder time finding rides, according to the lawsuit.

“The people that need it the most are the ones who are going to be the most affected by this,” Palmer said.

Enforcement

Like the first dispensary that sued the city, Montana Advanced Caregivers, Palmer said his was originally licensed as a medical marijuana business and renewed annually by the city for that purpose. Palmer has been in business since 2011.

Billings has had a de facto ban on medical marijuana businesses on the books since 2012. That city code says that all business licensees must follow state and federal law. Therefore, a business handling medical marijuana, which is illegal under federal law, shouldn't have received a license or renewal.

The two dispensaries that sued received their initial business licenses before the city passed the de facto dispensary ban.

But when it came time for renewal, the city still granted licenses for years and collected fees to do so. The businesses were always registered as dispensaries.

Assistant City Attorney Gina Dahl said Thursday that the license renewals are processed more quickly than an original application. And the fine print on renewal forms tells businesses they must obey all laws, including federal drug laws.

The city's position is that it was up to the dispensaries to pick up and leave town, even though they received license renewals from the city.

“Those renewal forms specifically tell business that it’s their duty to make any changes,” Dahl said.

It's unclear how much the city knew about the dispensaries it licensed. In a memo to the city council last fall, Dahl wrote that the city wasn't granting licenses to medical marijuana businesses.

The same memo acknowledged that a separate city code allowing medical marijuana dispensaries conflicted with the city code on business licensees obeying federal law.

Billings officials revisited marijuana regulation after the 2017 Montana Legislature added laws allowing cities to prohibit dispensaries, which are open only to registered cardholders.

Previously, the law allowed only local governments to regulate storefronts, which are open to the public.

Last year, the Billings City Council considered a zoning ban on medical marijuana businesses in addition to the business license ordinance. Debate over the zoning ban stalled, and it hasn't yet passed a final council vote.

In the meantime, the dispensaries filed lawsuits. City officials believe the two lawsuits represent the only two dispensary businesses in city limits. Many operate on county land.

Enforcement is on hold while the lawsuits play out.

“We have suspended enforcement against those two places,” Billings City Attorney Brent Brooks said.

In the case of Montana Advanced Caregivers, the first dispensary to sue, a court order prevents the city from enforcing a ban while the case is ongoing.

There are no hearings set in Palmer's lawsuit, which was filed Feb. 15.